Analyzing Highwoods Properties (NYSE:HIW) and Essex Property Trust (NYSE:ESS)

Highwoods Properties (NYSE:HIW) and Essex Property Trust (NYSE:ESS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitability, analyst recommendations and risk.

Earnings and Valuation

This table compares Highwoods Properties and Essex Property Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Highwoods Properties $720.03 million 6.70 $171.83 million $3.45 13.47
Essex Property Trust $1.40 billion 14.86 $390.15 million $12.57 25.05

Essex Property Trust has higher revenue and earnings than Highwoods Properties. Highwoods Properties is trading at a lower price-to-earnings ratio than Essex Property Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Highwoods Properties pays an annual dividend of $1.90 per share and has a dividend yield of 4.1%. Essex Property Trust pays an annual dividend of $7.80 per share and has a dividend yield of 2.5%. Highwoods Properties pays out 55.1% of its earnings in the form of a dividend. Essex Property Trust pays out 62.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Highwoods Properties and Essex Property Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Highwoods Properties 17.85% 5.93% 2.72%
Essex Property Trust 29.78% 6.73% 3.38%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Highwoods Properties and Essex Property Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Highwoods Properties 0 1 3 0 2.75
Essex Property Trust 0 6 8 0 2.57

Highwoods Properties presently has a consensus price target of $50.00, indicating a potential upside of 7.60%. Essex Property Trust has a consensus price target of $325.30, indicating a potential upside of 3.30%. Given Highwoods Properties’ stronger consensus rating and higher possible upside, analysts plainly believe Highwoods Properties is more favorable than Essex Property Trust.

Institutional and Insider Ownership

94.0% of Highwoods Properties shares are held by institutional investors. Comparatively, 96.5% of Essex Property Trust shares are held by institutional investors. 1.9% of Highwoods Properties shares are held by company insiders. Comparatively, 3.6% of Essex Property Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Highwoods Properties has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Essex Property Trust has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Summary

Essex Property Trust beats Highwoods Properties on 11 of the 16 factors compared between the two stocks.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW) real estate investment trust (“REIT”) and a member of the S&P MidCap 400 Index. The Company is a fully-integrated office REIT that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa.

About Essex Property Trust

Essex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 245 apartment communities with an additional 6 properties in various stages of active development.

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